No, it's a 32-bit issue. 32-bit Windows can only allow program access to up to 3GB of RAM, and even then each 32-bit application can only see 2GB of that.
In other words, there's next to no point in purchasing more than 2GB of RAM for a 32-bit Windows system.
I usually run 32-bit Windows (XP, WS 2003) as guest systems. When developing software it's sometimes more convenient and appropriate to have your development environment inside VMWare (defined environment, ability to move the VMWare image to another computer, ability to do client server development on a single (physical) machine).
Apart from that there are still advantages to have more than 2 GB of ram. Even if a single process cannot use more than 2 GB, you have usually more than one process running and system uses the remaining ram as file cache, which can speed up work considerably (of course depending on what you do).